Mr Darren McDonell v Capricornia Training Company Ltd

[2013] FWC 6402

[2013] FWC 6402

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Darren McDonell
v
Capricornia Training Company Ltd
(U2013/8215)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 9 SEPTEMBER 2013

Summary: jurisdictional objection - whether Applicant covered by a modern award for purposes of s.382 - application of s.382(b)(i) of the Act - principal purpose test.

[1] The Applicant in this matter is Mr Darren McDonell, who was dismissed from his employment with the Capricornia Training Company Limited (“the Company”) on 26 March 2013. The Applicant now seeks an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (“the Act”).

[2] By correspondence dated 26 March 2013, the Chairman of the Board of the Company wrote to the Applicant (in the Applicant’s capacity as “Chief Executive Officer” of the Company), inter alia, in the following terms:

We wish to advise that the board has resolved to terminate your contract pursuant to the provisions of clause 21.1(B) effective immediately. The Company is required to provide you with three months notice or an amount equal to the total remuneration package for that period in lieu of such notice. The Company will exercise the latter option meaning your employment ceases immediately and payment for the three months notice period will be made to your designated account.

[3] The Company has objected to the application for relief being heard until such time as a jurisdictional point was determined, that being whether the Applicant was a person protected from unfair dismissal.

[4] Section 382 of the Act provides as follows:

382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[5] There is no contest between the parties that s.382(a) of the Act has no relevance to the application. The Applicant was employed for a period just under 24 months. Nor is there a contest that s.382(b)(ii) of the Act and s.382(b)(iii) of the Act do not apply to the Applicant. That is, it was agreed that no enterprise agreement applied to the Applicant’s employment, and that the sum of the Applicant’s annual rate of earnings exceeded the high income threshold.

[6] All these matters expressly were not subject to contest or challenge.

[7] However, the contest remaining concerns the application of s.382(b)(i) of the Act. Specifically, the Applicant claims that he was covered by the Labour Market Assistance Industry Award 2010 (“the Award”), and specifically that his position was as a Manager Grade 2, as stipulated in Schedule B of the Award. Consequently, the Applicant contends that he is a person protected from unfair dismissal for purposes of s.382 of the Act.

[8] There is no argument that the Award does not apply to the industry in which the Company is involved.

[9] Where the parties differ in this matter is that the Company contends that the Applicant at all times was employed pursuant to a written agreement (the “CEO Employment Agreement”) which he had entered into in 2011, and under which he performed duties as the Chief Executive Officer for the Company. As such, the Applicant - so the Company contends - could not be covered by the Award and his application must therefore fail for want of jurisdiction.

[10] Specifically, the Applicant asserts that he was primarily a manager only for the Award’s purposes, and that at the time of his dismissal he was not performing the duties of CEO of the Company.

[11] The Applicant does not deny that he was at all times a party to the CEO Employment Agreement, that it had never been rescinded by either party and that he continued to be the CEO of the Company. He maintains, further though, at the time of his dismissal he was not performing the role of CEO, and the role he was performing falls under the managerial classifications of the Award. The role he claims to have been performing at the time of his dismissal was that of Manager - Apprentice Services, which was a discrete managerial function within the Company’s operations (and distinguishable from his Chief Executive Officer role).

[12] In this respect, the Applicant argues that on or about 4 March 2013, he had transition to the role of Manager, Apprentice Services, and that this work fell within the scope of the managerial classifications in the Award. This was some three weeks prior to his dismissal. The Applicant’s argument here is not entirely convincing. He contends that as a result of an organisational review he oversaw, he took up the role of Manager, Apprentice Services. This much appears to be agreed between the parties. But the Applicant contends that he was forced to take up that role, or else, he perceived that there was an expectation that he should do so. The Respondent’s evidence was without equivocation - the Applicant came up with the proposal and decided to bring the role within his supervision and responsibilities.

[13] The Applicant came to argue that in actuality he had in effect ceased performing the duties as Chief Executive Officer and had been and was performing the role of Manager, Apprentice Services at the time of his dismissal. He contends that as he was performing this role at the time of his dismissal he was covered by the Award, and thus his application is within jurisdiction.

[14] The managerial grades in the schedule to the Award indicate that the Grade 2 Manager is an employee engaged to manage a single service or multiple projects sponsored by the same employer with total weekly staffing in excess of 285 staffing hours. As is ordinarily the case, the Grade 2 position draws on the Grade 1 Manager position description, other than in respect of its greater scope for supervision and responsibility. Grade 2 Managers may also perform the role of Manager of a Skill Share Disability Access and Support Unit.

[15] The Grade 2 management position also indicates that the position may require the incumbent to supervise the work of Grade 1 Managers and/or training and placement coordinators.

[16] The Applicant claims that not only does the Grade 2 management position reflect the principal purpose of the position that he held (which he argues was the Manager, Apprentice Services), it was also indicated on his payslips that the Award applied to him. The Applicant’s argument in this regard is that his payslips included a window requiring the identification of the relevant award or agreement. Where it so requested such an identification, the Award was cited. The Respondent argued, convincingly I might add through the evidence of Mr Meacham, the Company Accountant, that the window was populated merely because of a software payroll process requirement, and was not in any way determinative of the matter at hand.

[17] Whether the Applicant was employed in the managerial classification he claims is determined by reference to the principal purpose test, as articulated in the Full Bench decision of the Australian Industrial Relations Commission (as it then was) in R Brand v APIR Systems Limited. 1 That decision, in turn, cited the decision of the Full Bench of the Australian Industrial Relations Commission (as it then was) in Carpenter v Corona Manufacturing Pty Ltd,2 which stated relevantly as follows:

In our view, in determining whether or not a particular award applies to identified employment, more is required than a mere quantitative assessment of the time spent in carrying out various duties. An examination must be made of the nature of the work and the circumstances in which the employee is employed to do the work with a view to ascertaining the principal purpose for which the employee is employed.

[18] It appears to me that the Applicant did indeed assume a number of the responsibilities of the Manager, Apprentice Services as part of an organisational remodelling, but he did so as part of his wider role as Chief Executive Officer. That is, the Applicant continued at all times to perform his duties as a CEO for the Company. This in effect was the principal purpose for his employment pursuant to the CEO Employment Agreement. The CEO Employment Agreement was signed on 10 March 2011 and was never terminated or otherwise set aside. The Applicant continued to be employed for the purposes of carrying out the very specific CEO related roles stipulated in the CEO Employment Agreement.

[19] As suggested above, the Applicant may well have been particularly attentive over a number of weeks in March to the apprentice functions (responsibility for which he had assumed) but that does not diminish the principal purpose of his having been employed by the Company. And that was to perform the function of CEO.

[20] So far as it might be relevant to these proceedings, the quantum of work, as the Full Bench in R Brand v APIR Systems Limited stated, is not determinative of the principal purpose for which the employee is employed.

[21] Thus, whether or not the Applicant assumed some further responsibilities as a consequence of business changes does not affect the conclusion that the principal purpose for which the Applicant was employed and which he continued to be employed was to perform the role of CEO of the Company pursuant to the CEO Employment Agreement.

[22] There was never any instrument or direction that put aside the parties’ contractual relationship in that regard. That is, the Applicant was never demoted or else had his role as CEO terminated, as I have said above.

[23] As I have said above, it may be that a subset of the range of responsibilities the Applicant undertook in the final few weeks of his employment were responsibilities of the Manager, Apprentice Services. But again, he assumed those responsibilities as he could as Chief Executive Officer. Whether he transferred offices so he could be closer to the field staff takes the matter no further.

[24] It is enough to say, further, that the minimum wages specified in the Award range between $1052.20 through to $1121.40 per week for the position the Applicant claims that he held. The Applicant’s salaried remuneration at the time of his dismissal was in the vicinity of $125,000 per annum. This is approximately twice the minimum wage provided for in the Award. A wage differential of this degree ordinarily would bring into question the applicability of an award classification to the work performed.

[25] The Applicant continued to be remunerated as the CEO for the Company.

[26] Moreover, the Applicant continued to perform functions within the organisation as the CEO and represented himself as such in his e-mail correspondence and otherwise. These functions are stipulated at schedule A to the CEO Employment Agreement. They include particularly high level responsibilities and accountabilities which go well and truly beyond the scope of the managerial positions described in the Award (in any event).

[27] The Applicant was also dismissed pursuant to the CEO Employment Agreement and received the relevant benefits and entitlements flowing from those terms. The Applicant did not appear to be disposed or inclined to claim that those benefits - which included the payment of three months of his remuneration as it was as a CEO (and not as a Manager - Apprentice Services) were improperly made. Nor did the Company seek to honour its contractual obligations other than in respect of the CEO Employment Agreement, which underpins its own perception of the role the Applicant performed in its organisation.

Conclusion

[28] The principal purpose for which the Applicant as an employee was employed was as CEO for the Company. The role of a CEO is a significant departure in responsibilities and accountabilities from the two managerial grades specified in the Award. The remuneration is therefore significant higher than the minimum pay rates for the managerial grades under the Award. Other duties performed by the Applicant were performed within the scope of his executive role within the business. The performance of those duties did not cause the principal purpose for which the Applicant was employed to change.

[29] The Applicant cannot be said to have been covered by the Award.

[30] It is clear that s.382(a) of the Act has no application to the Applicant. There was no contest that s.382(b)(ii) of the Act and s.382(b)(iii) of the Act did not apply to the Applicant. That is, it was agreed that no enterprise agreement applied to the Applicant’s employment, and it was agreed that the sum of the Applicant’s annual rate of earnings exceeded the high income threshold.

[31] However, given the discussion above, it is evident that the Applicant is not covered by a modern award for the purposes of s.382(b)(i) of the Act.

[32] As a consequence of these findings, the Applicant is not a person who is protected from unfair dismissal for the purposes of s.382 of the Act. The application under s.394 of the Act must therefore be dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr D. McDonell, Applicant

Mr A. Grant, solicitor, for the Respondent

Hearing details:

Brisbane (and Rockhampton by video)

2013

30 August

 1   Appeal by Brand against decision of Deegan C of 19 June 2003 [PR933272] Re: APIR Systems Ltd, Giudice J, Marsh SDP, Thatcher C, 16 September 2003 [PR938031].

 2   Williams SDP, Lacy SDP, Tolley C, 17 December 2002 [PR925731].

Printed by authority of the Commonwealth Government Printer

<Price code C, PR541070>